Since May 2008, the Bank’s Global Food Crisis Response Program has helped 40 countries cope with rapidly rising food prices.
The Bank’s Board of Directors recently extended the program through June 2011, to fast track disbursement of $760 million in existing funds to countries in need.
Food price volatility remains a concern; wheat prices increased by 70% from June through early August 2010.
October 20, 2010—Two years ago, when the food price crisis was in full swing, Tanzania’s farmers were facing another real problem. Fertilizer prices had risen twice as fast as food prices.
For these farmers – affected by events on world energy markets far beyond their control – the sharp rise in the cost of fertilizers meant their harvest would be reduced.
Help arrived through the World Bank’s Global Food Crisis Response Program (GFRP). In Tanzania, 1.5 million farmers received vouchers at the start of the planting season, allowing them to obtain improved seeds and fertilizer to get more from their land. The program was just part of a range of measures undertaken in Tanzania to help people cope with the crisis.
The food crisis response program offered more than just quicker access to seeds and fertilizers. In Nepal, for instance, a social safety net scheme saw more than 168,000 people gain work through food- or cash-for-work programs, providing food for about 940,000 people across 28 districts deemed to be food-insecure.
These are just two examples of results achieved through the GFRP set up to help countries cope with the rapid rise in global food prices in 2008.
Price Volatility ‘A Key Risk’
Since May 2008, total Bank-funded operations under the GFRP have amounted to more than $1.2 billion, with assistance reaching the most affected regions of Africa and Asia. Donors have also contributed about $200 million for additional GFRP projects, resulting in assistance to 40 countries during the recent food price spike.
Now, with food price volatility a heightened concern, the World Bank’s Board of Executive Directors has extended the life of the food crisis program through June 2011– a move that paves the way for fast-track processing and disbursement of some $760 million in existing funds for countries in need.
According to World Bank Managing Director Ngozi Okonjo-Iweala, the reasoning behind reactivating the fund is simple: it’s a case of “being prepared.”
Okonjo-Iweala is quick to point out that, at this stage, food prices are not expected to reach 2008 levels.
“Nevertheless, food price volatility remains a key risk,” she says. “We do expect high food price volatility to continue for some time, so reactivating the food crisis facility means we’re ready to help if asked.”
“It is higher volatility that has again raised global concerns over food prices. We’re also hearing of growing concern among countries about this continued volatility and the uncertainty in food markets,” she says.
Impact on the Ground
While global food prices have declined from their peaks of 2008, prices are still higher than before the food crisis that year. Wheat prices recently spiked – increasing by 70% in June this year through early August. Prices are now lower than their August peak – but remain at levels about 50% higher than their June levels. And that’s despite the fact that wheat stocks are relatively high.
Okonjo-Iweala says since the GFRP has had an obvious impact on the ground, it “made sense” to reactivate the program, if the need for more action arises.
Around the globe, 5.9 million farm households have benefitted from the agricultural focus of the GFRP. The program has boosted production in the short term by providing inputs like fertilizers, seeds and farming tools, as well as rehabilitation of small-scale infrastructure projects.
GFRP-supported social protection schemes have fed schoolchildren; provided women and children with nutrition supplements; and offered cash transfers and cash- or food-for-work schemes to people hard hit by volatile food prices. GFRP’s estimated support for social protection programs has already reached 5.6 million people.
The GFRP also provided budget support to some governments to allow countries to lower food taxes and import tariffs while reducing associated cuts in public spending.
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